DENVER, Feb. 12, 2015 /PRNewswire/ -- DaVita
HealthCare Partners Inc. (NYSE: DVA) today announced results for
the quarter and year ended December 31,
2014. Income from continuing operations attributable to
DaVita HealthCare Partners Inc. for the quarter and year ended
December 31, 2014 was $208 million and $723
million, or $0.96 and
$3.33 per share, respectively.
Adjusted income from continuing operations attributable to DaVita
HealthCare Partners Inc. for the year ended December 31, 2014, excluding a loss contingency
reserve and debt refinancing charges, was $792 million, or $3.64 per share.
Income from continuing operations attributable to DaVita
HealthCare Partners Inc. for the quarter and year ended
December 31, 2013 was $212 million and $620
million, or $0.99 and
$2.89 per share, respectively.
Adjusted income from continuing operations attributable to DaVita
HealthCare Partners Inc. for the year ended December 31, 2013, excluding a loss contingency
reserve and a contingent earn-out obligation adjustment, was
$818 million, or $3.81 per share.
Financial and operating highlights include:
- Cash Flow: For the year ended
December 31, 2014, operating cash
flow was $1.459 billion and free cash
flow was $1.045 billion. For the
three months ended December 31, 2014,
operating cash flow was $(70) million
and free cash flow was $(197)
million. Operating cash flow and free cash flow for the
quarter and year ended December 31,
2014 was negatively impacted by approximately $269 million of after-tax payments made in
connection with the settlement of the 2010 and 2011 U.S. Attorney
Physician Relationship Investigations.
- Operating Income / Adjusted: Operating income for the quarter and year ended
December 31, 2014 was $452 million and $1.815
billion, respectively. Adjusted operating income for the
year ended December 31, 2014,
excluding a loss contingency reserve, was $1.832 billion. The quarter and year ended
December 31, 2014 benefited from a
$29 million net favorable impact
resulting from the revenue recognition of certain California
Medicaid payments received in prior periods, as discussed
below.
Operating income for the quarter and year ended December 31, 2013 was $484
million and $1.550 billion,
respectively. Adjusted operating income for the year ended
December 31, 2013, excluding a loss
contingency reserve, an adjustment to reduce a tax asset associated
with the HCP acquisition escrow provisions and a contingent
earn-out obligation adjustment, was $1.898
billion.
- Adjusted Diluted
Income from Continuing Operations Per Share: Adjusted income from continuing operations attributable
to DaVita HealthCare Partners Inc. for the quarter and year ended
December 31, 2014, excluding the
amortization of intangible assets associated with acquisitions, net
of tax impacts, was $236 million and
$896 million, respectively, and
adjusted diluted income from continuing operations per share was
$1.09 and $4.13, respectively. In addition, adjusted income
from continuing operations and adjusted diluted income from
continuing operations per share for the year ended December 31, 2014 excluded a loss contingency
reserve and debt refinancing charges.
Adjusted income from continuing operations attributable to DaVita
HealthCare Partners Inc. for the quarter and year ended
December 31, 2013, excluding the
amortization of intangible assets associated with acquisitions, net
of tax impacts, was $237 million and
$915 million, respectively, and
adjusted diluted income from continuing operations per share was
$1.10 and $4.26, respectively. In addition, adjusted income
from continuing operations and adjusted diluted income from
continuing operations per share for the year ended December 31, 2013 excluded a loss contingency
reserve and a contingent earn-out obligation adjustment.
- California Medicaid
Revenue: The quarter and year ended
December 31, 2014 benefited from
revenue recognition of $35 million
related to the resolution of dialysis payments received in prior
periods from the California Medicaid program. The increase in
revenue was reduced by certain related expenses resulting in a net
increase in operating income of approximately $29 million and resulted in a non-recurring
increase in net income attributable to DaVita HealthCare Partners
Inc. of approximately $14
million.
- Volume: Total U.S. dialysis treatments
for the fourth quarter of 2014 were 6,465,826, or 81,434 treatments
per day, representing a per day increase of 6.2% over the fourth
quarter of 2013. Non-acquired treatment growth in the fourth
quarter of 2014 increased 5.2% over the fourth quarter of 2013 and
normalized non-acquired treatment growth in the fourth quarter of
2014 increased by 4.6% over the fourth quarter of 2013.
The number of member months for which HCP provided capitated care
during the fourth quarter of 2014 was approximately 2.5 million
representing an increase of 9.4% as compared to the fourth quarter
of 2013, inclusive of growth contributed from acquisitions.
- Effective Tax Rate: Our effective tax
rate was 29.3% and 34.1% for the quarter and year ended
December 31, 2014, respectively. This
effective tax rate is impacted by the amount of third party owners'
income attributable to non-tax paying entities. The effective tax
rate attributable to DaVita HealthCare Partners Inc. was 33.3% and
38.1% for the quarter and year ended December 31, 2014, respectively. Our effective
tax rate for the quarter and year ended December 31, 2014 decreased due to the
reinstatement of federal and state credits and a reduction in our
tax reserves.
We currently expect our 2015 effective tax rate attributable to
DaVita HealthCare Partners Inc. to be approximately 39.5% to
40.5%.
- Center
Activity: As of December 31,
2014, we provided dialysis services to a total of
approximately 180,000 patients at 2,270 outpatient dialysis
centers, of which 2,179 centers are located in the United States and 91 centers are located
in ten countries outside of the United
States. During the fourth quarter of 2014, we opened a total
of 30 new dialysis centers, acquired two dialysis centers, and
closed five dialysis centers in the
United States. We also acquired three dialysis centers and
opened one new dialysis centers outside of the United States.
Outlook
- We still expect our consolidated operating income for 2015 to
be in the range of $1.750 billion to $1.900
billion.
- We still expect our operating income for Kidney Care for 2015
to be in the range of $1.525 billion to
$1.625 billion.
- We still expect our operating income for HCP for 2015 to be in
the range of $225 million to $275
million.
- We still expect our consolidated operating cash flow for 2015
to be in the range of $1.500 billion to
$1.700 billion.
These projections and the underlying assumptions involve
significant risks and uncertainties, including those described
below, and actual results may vary significantly from these current
projections.
We will be holding a conference call to discuss our results for
the fourth quarter ended December 31,
2014 on February 12, 2015 at
5:00 p.m. Eastern Time. The
dial in number for the U.S. is (888) 950-9401 and for international
is (517) 308-9354. A replay of the conference call will be
available on DaVita's official web page,
www.davitahealthcarepartners.com, for the following 30 days.
This release contains forward-looking statements within the
meaning of the federal securities laws, including statements
related to our guidance and expectations for our 2015 consolidated
operating income, our 2015 Kidney Care operating income, HCP's 2015
operating income, our 2015 consolidated operating cash flows and
our 2015 effective tax rate attributable to DaVita HealthCare
Partners Inc. Factors that could impact future results include the
uncertainties associated with the risk factors set forth in our SEC
filings, including our annual report on Form 10-K for the year
ended December 31, 2013, our
subsequent quarterly and annual reports and our current reports on
Form 8-K. The forward-looking statements should be considered in
light of these risks and uncertainties.
These risks and uncertainties include, but are not limited
to, and are qualified in their entirety by reference to the full
text of those risk factors in our SEC filings relating
to:
- the concentration of profits generated by
higher-paying commercial payor plans for which there is continued
downward pressure on average realized payment rates, and a
reduction in the number of patients under such plans, which may
result in the loss of revenues or patients,
- a reduction in government payment rates
under the Medicare End Stage Renal Disease program or other
government-based programs,
- the impact of the Center for Medicare and
Medicaid Services (CMS) 2015 Medicare Advantage benchmark
structure,
- risks arising from potential federal
and/or state legislation that could have an adverse effect on our
operations and profitability,
- changes in pharmaceutical or anemia
management practice patterns, payment policies, or pharmaceutical
pricing,
- legal compliance risks, including our
continued compliance with complex government regulations and
current or potential investigations by various government entities
and related government or private-party proceedings and in
compliance with the Corporate Integrity Agreement and the related
restrictions on our business and operations required by the
Corporate Integrity Agreement and other settlement terms, and the
financial impact thereof,
- our ability to maintain contracts with
physician medical directors, changing affiliation models for
physicians, and the emergence of new models of care introduced by
the government or private sector, that may erode our patient base
and reimbursement rates,
- our ability to complete acquisitions,
mergers or dispositions that we might be considering or announce,
or to integrate and successfully operate any business we may
acquire or have acquired, including HCP, or to expand our
operations and services to markets outside the United States,
- the risk that we might invest material
amounts of capital and incur significant costs in connection with
the growth and development of our international operations, yet we
might not be able to operate them profitably anytime soon, if at
all,
- risks arising from the use of accounting
estimates, judgments and interpretations in our financial
statements,
- the risk that the cost of providing
services under HCP's agreements may exceed our
compensation,
- the risk that reductions in reimbursement
rates, including Medicare Advantage rates, and future regulations
may negatively impact HCP's business, revenue and
profitability,
- the risk that HCP may not be able to
successfully establish a presence in new geographic regions or
successfully address competitive threats that could reduce its
profitability,
- the risk that a disruption in HCP's
healthcare provider networks could have an adverse effect on HCP's
business operations and profitability,
- the risk that reductions in the quality
ratings of health maintenance organization plan customers of HCP
could have an adverse effect on HCP's business, or
- the risk that health plans that acquire
health maintenance organizations may not be willing to contract
with HCP or may be willing to contract only on less favorable
terms.
We base our forward-looking statements on information
currently available to us at the time of this release, and we
undertake no obligation to update or revise any forward-looking
statements, whether as a result of changes in underlying factors,
new information, future events or otherwise.
This release contains non-GAAP financial measures. For
reconciliations of these non-GAAP financial measures to their most
comparable measure calculated and presented in accordance with
GAAP, see the attached reconciliation schedules. For the reasons
stated in the reconciliation schedules, we believe our presentation
of non-GAAP financial measures provides useful supplemental
information for investors.
|
DAVITA HEALTHCARE
PARTNERS INC.
|
|
CONSOLIDATED
STATEMENTS OF INCOME
|
|
(unaudited)
|
|
(dollars in
thousands, except per share data)
|
|
|
Three
months ended
December 31,
|
Year ended
December 31,
|
|
2014
|
2013
|
2014
|
2013
|
|
Patient service
revenues
|
$ 2,324,458
|
$ 2,151,972
|
$ 8,868,338
|
$ 8,307,195
|
|
Less: Provision for
uncollectible accounts
|
(96,664 )
|
(76,821 )
|
(366,884 )
|
(293,546 )
|
|
Net patient service
revenues
|
2,227,794
|
2,075,151
|
8,501,454
|
8,013,649
|
|
Capitated
revenues
|
825,808
|
767,362
|
3,261,288
|
2,987,315
|
|
Other
revenues
|
274,415
|
220,696
|
1,032,364
|
763,086
|
|
Total net
revenues
|
3,328,017
|
3,063,209
|
12,795,106
|
11,764,050
|
|
Operating expenses
and charges:
|
|
|
|
|
|
Patient care costs and
other costs
|
2,366,461
|
2,127,832
|
9,119,305
|
8,198,377
|
|
General and
administrative
|
355,987
|
318,827
|
1,261,506
|
1,176,485
|
|
Depreciation and
amortization
|
153,253
|
139,474
|
590,935
|
528,737
|
|
Provision for
uncollectible accounts
|
4,773
|
1,216
|
14,453
|
4,852
|
|
Equity investment
income
|
(4,542 )
|
(8,319 )
|
(23,234 )
|
(34,558 )
|
|
Loss contingency
accrual
|
—
|
—
|
17,000
|
397,000
|
|
Contingent earn-out
obligation adjustment
|
—
|
—
|
—
|
(56,977 )
|
|
Total operating
expenses and charges
|
2,875,932
|
2,579,030
|
10,979,965
|
10,213,916
|
|
Operating
income
|
452,085
|
484,179
|
1,815,141
|
1,550,134
|
|
Debt
expense
|
(97,949 )
|
(107,609 )
|
(410,294 )
|
(429,943 )
|
|
Debt refinancing
charges
|
—
|
—
|
(97,548 )
|
—
|
|
Other income,
net
|
229
|
3,450
|
2,374
|
4,787
|
|
Income from
continuing operations before income taxes
|
354,365
|
380,020
|
1,309,673
|
1,124,978
|
|
Income tax
expense
|
103,977
|
135,747
|
446,343
|
381,013
|
|
Income from
continuing operations
|
250,388
|
244,273
|
863,330
|
743,965
|
|
Discontinued
operations:
|
|
|
|
|
|
Loss from operations
of discontinued operations, net of tax
|
—
|
—
|
—
|
(139 )
|
|
Gain on disposal of
discontinued operations, net of tax
|
—
|
—
|
—
|
13,375
|
|
Net income
|
250,388
|
244,273
|
863,330
|
757,201
|
|
Less: Net income
attributable to noncontrolling interests
|
(42,368 )
|
(31,995 )
|
(140,216 )
|
(123,755 )
|
|
Net income
attributable to DaVita HealthCare Partners Inc
|
$
208,020
|
$
212,278
|
$
723,114
|
$
633,446
|
|
Earnings per
share:
|
|
|
|
|
|
Basic income from
continuing operations per share attributable to DaVita HealthCare
Partners Inc
|
$
0.98
|
$
1.01
|
$
3.41
|
$
2.95
|
|
Basic net income per
share attributable to DaVita HealthCare Partners Inc
|
$
0.98
|
$
1.01
|
$
3.41
|
$
3.02
|
|
Diluted income from
continuing operations per share attributable to DaVita HealthCare
Partners Inc
|
$
0.96
|
$
0.99
|
$
3.33
|
$
2.89
|
|
Diluted net income per
share attributable to DaVita HealthCare Partners Inc
|
$
0.96
|
$
0.99
|
$
3.33
|
$
2.95
|
|
Weighted average
shares for earnings per share:
|
|
|
|
|
|
Basic
|
212,941,850
|
210,574,383
|
212,301,827
|
209,939,364
|
|
Diluted
|
217,620,369
|
215,154,029
|
216,927,681
|
214,763,887
|
|
Amounts
attributable to DaVita HealthCare Partners Inc.:
|
|
|
|
|
|
Income from continuing
operations
|
$
208,020
|
$
212,278
|
$
723,114
|
$
620,197
|
|
Discontinued
operations
|
—
|
—
|
—
|
13,249
|
|
Net income
|
$
208,020
|
$
212,278
|
$
723,114
|
$
633,446
|
|
DAVITA HEALTHCARE
PARTNERS INC.
|
|
CONSOLIDATED
STATEMENTS OF COMPREHENSIVE INCOME
|
|
(unaudited)
|
|
(dollars in
thousands)
|
|
|
Three months
ended
December
31,
|
Year ended
December 31,
|
|
2014
|
2013
|
2014
|
2013
|
|
Net income
|
$ 250,388
|
$ 244,273
|
$ 863,330
|
$ 757,201
|
|
Other comprehensive
(loss) income, net of tax:
|
|
|
|
|
|
Unrealized (losses)
gains on interest rate swap and cap agreements:
|
|
|
|
|
|
Unrealized
(loss) gain on interest rate swap and cap agreements
|
(2,882)
|
(1,414)
|
(10,059)
|
169
|
|
Reclassifications
of net swap and cap agreements realized loss into net
income
|
849
|
3,457
|
10,608
|
12,889
|
|
Unrealized (loss)
gains on investments:
|
|
|
|
|
|
Unrealized (loss) gain on investments
|
(279)
|
933
|
238
|
2,300
|
|
Reclassification of net investment realized gains into net
income
|
─
|
(396)
|
(207)
|
(490)
|
|
Foreign currency
translation adjustments
|
(11,081)
|
(1,010)
|
(22,952)
|
(2,216)
|
|
Other comprehensive
(loss) income
|
(13,393)
|
1,570
|
(22,372)
|
12,652
|
|
Total comprehensive
income
|
236,995
|
245,843
|
840,958
|
769,853
|
|
Less: Comprehensive
income attributable to noncontrolling interests
|
(42,368)
|
(31,995)
|
(140,216)
|
(123,755)
|
|
Comprehensive income
attributable to DaVita HealthCare Partners Inc
|
$ 194,627
|
$ 213,848
|
$ 700,742
|
$ 646,098
|
|
DAVITA HEALTHCARE
PARTNERS INC.
|
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
|
(unaudited)
|
|
(dollars in
thousands)
|
|
|
Year ended
December 31,
|
|
2014
|
2013
|
|
Cash flows from
operating activities:
|
|
|
|
Net income
|
$
863,330
|
$
757,201
|
|
Adjustments to
reconcile net income to cash provided by operating
activities:
|
|
|
|
Loss contingency
accrual
|
17,000
|
397,000
|
|
Depreciation and
amortization
|
590,935
|
528,119
|
|
Debt refinancing
charges
|
97,548
|
─
|
|
Stock-based
compensation expense
|
54,969
|
59,998
|
|
Tax benefits from
stock award exercises
|
59,119
|
46,898
|
|
Excess tax benefits
from stock award exercises
|
(45,271 )
|
(36,197 )
|
|
Deferred income
taxes
|
210,955
|
(25,380 )
|
|
Equity investment
income, net
|
10,125
|
2,872
|
|
Other non-cash charges
(income) and loss on disposal of assets
|
39,274
|
(31,351 )
|
|
Changes in operating
assets and liabilities, other than from acquisitions and
divestitures:
|
|
|
|
Accounts
receivable
|
(40,676 )
|
(59,640 )
|
|
Inventories
|
(46,398 )
|
(8,971 )
|
|
Other receivables and
other current assets
|
(61,674 )
|
(108,434 )
|
|
Other long-term
assets
|
2,916
|
17,731
|
|
Accounts
payable
|
(2,956 )
|
16,666
|
|
Accrued compensation
and benefits
|
98,624
|
38,368
|
|
Other current
liabilities
|
83,590
|
78,817
|
|
Loss contingency
reserve
|
(410,356 )
|
─
|
|
Income
taxes
|
(60,475 )
|
33,499
|
|
Other long-term
liabilities
|
(1,172 )
|
66,145
|
|
Net cash provided by
operating activities
|
1,459,407
|
1,773,341
|
|
Cash flows from
investing activities:
|
|
|
|
Additions of property
and equipment, net
|
(641,330 )
|
(617,597 )
|
|
Acquisitions
|
(272,094 )
|
(310,394 )
|
|
Proceeds from asset
and business sales
|
8,791
|
62,258
|
|
Purchase of
investments available for sale
|
(8,440 )
|
(12,445 )
|
|
Purchase of
investments held-to-maturity
|
(472,628 )
|
(1,039 )
|
|
Proceeds from sale of
investments available for sale
|
2,475
|
4,158
|
|
Proceeds from
investments held-to-maturity
|
141,072
|
1,376
|
|
Purchase of intangible
assets
|
(1,018 )
|
(2,391 )
|
|
Purchase of equity
investments
|
(35,382 )
|
(1,305 )
|
|
Distributions received
on equity investments
|
825
|
497
|
|
Net cash used in
investing activities
|
(1,277,729 )
|
(876,882 )
|
|
Cash flows from
financing activities:
|
|
|
|
Borrowings
|
60,038,508
|
66,286,097
|
|
Payments on long-term
debt and other financing costs
|
(60,046,487 )
|
(66,723,385 )
|
|
Deferred financing
costs and debt redemption costs
|
(122,988 )
|
(719 )
|
|
Distributions to
noncontrolling interests
|
(149,339 )
|
(139,326 )
|
|
Stock award exercises
and other share issuances, net
|
19,500
|
16,423
|
|
Excess tax benefits
from stock award exercises
|
45,271
|
36,197
|
|
Contributions from
noncontrolling interests
|
64,655
|
36,996
|
|
Proceeds from sales of
additional noncontrolling interests
|
3,777
|
8,295
|
|
Purchases from
noncontrolling interests
|
(17,876 )
|
(3,569 )
|
|
Net cash used in
financing activities
|
(164,979 )
|
(482,991 )
|
|
Effect of exchange
rate changes on cash and cash equivalents
|
2,293
|
(967 )
|
|
Net increase in cash
and cash equivalents
|
18,992
|
412,501
|
|
Cash and cash
equivalents at beginning of the year
|
946,249
|
533,748
|
|
Cash and cash
equivalents at end of the year
|
$
965,241
|
$
946,249
|
|
DAVITA HEALTHCARE
PARTNERS INC.
|
|
CONSOLIDATED
BALANCE SHEETS
|
|
(unaudited)
|
|
(dollars in
thousands, except per share data)
|
|
|
December
31,
|
December
31,
|
|
2014
|
2013
|
|
ASSETS
|
|
|
|
Cash and cash
equivalents
|
$
965,241
|
$
946,249
|
|
Short-term
investments
|
337,399
|
6,801
|
|
Accounts receivable,
less allowance of $242,674 and $237,143
|
1,525,849
|
1,485,163
|
|
Inventories
|
136,085
|
88,805
|
|
Other
receivables
|
400,916
|
349,090
|
|
Other current
assets
|
186,842
|
176,414
|
|
Income tax
receivable
|
83,839
|
10,315
|
|
Deferred income
taxes
|
240,626
|
409,441
|
|
Total current
assets
|
3,876,797
|
3,472,278
|
|
Property and
equipment, net
|
2,469,099
|
2,189,411
|
|
Intangibles,
net
|
1,949,498
|
2,024,373
|
|
Equity
investments
|
65,637
|
40,686
|
|
Long-term
investments
|
89,389
|
79,557
|
|
Other long-term
assets
|
77,000
|
79,598
|
|
Goodwill
|
9,415,295
|
9,212,974
|
|
$ 17,942,715
|
$ 17,098,877
|
|
LIABILITIES AND
EQUITY
|
|
|
|
Accounts
payable
|
$
445,453
|
$
435,465
|
|
Other
liabilities
|
506,579
|
464,422
|
|
Accrued compensation
and benefits
|
698,475
|
603,013
|
|
Medical
payables
|
314,347
|
287,452
|
|
Loss contingency
reserve
|
3,644
|
397,000
|
|
Current portion of
long-term debt
|
120,154
|
274,697
|
|
Total current
liabilities
|
2,088,652
|
2,462,049
|
|
Long-term
debt
|
8,383,280
|
8,141,231
|
|
Other long-term
liabilities
|
389,806
|
380,337
|
|
Deferred income
taxes
|
890,701
|
812,419
|
|
Total
liabilities
|
11,752,439
|
11,796,036
|
|
Commitments and
contingencies
|
|
|
|
Noncontrolling
interests subject to put provisions
|
829,965
|
697,300
|
|
Equity:
|
|
|
|
Preferred stock
($0.001 par value, 5,000,000 shares authorized; none
issued)
|
|
|
|
Common stock ($0.001
par value, 450,000,000 shares authorized; 215,640,968 and
213,163,248 shares issued and outstanding at December 31, 2014 and
at December 31, 2013, respectively)
|
216
|
213
|
|
Additional paid-in
capital
|
1,108,211
|
1,070,922
|
|
Retained
earnings
|
4,087,103
|
3,363,989
|
|
Accumulated other
comprehensive loss
|
(25,017)
|
(2,645)
|
|
Total DaVita
HealthCare Partners Inc. shareholders' equity
|
5,170,513
|
4,432,479
|
|
Noncontrolling
interests not subject to put provisions
|
189,798
|
173,062
|
|
Total
equity
|
5,360,311
|
4,605,541
|
|
$ 17,942,715
|
$ 17,098,877
|
|
DAVITA HEALTHCARE
PARTNERS INC.
|
|
SUPPLEMENTAL
FINANCIAL DATA
|
|
(unaudited)
|
|
(dollars in
millions, except for per share and per treatment
data)
|
|
|
Three months
ended
|
Year
ended
December 31,
2014
|
|
December
31,
2014
|
September
30,
2014
|
December
31,
2013
|
|
1. Consolidated
Financial Results:
|
|
|
|
|
|
Consolidated net
revenues
|
$ 3,328
|
$ 3,252
|
$ 3,063
|
$ 12,795
|
|
Operating
income
|
$ 452
|
$ 438
|
$ 484
|
$ 1,815
|
|
Operating income
margin
|
13.6%
|
13.5%
|
15.8%
|
14.2%
|
|
Operating income
excluding a loss contingency reserve(1)
|
$ 452
|
$ 455
|
$ 484
|
$ 1,832
|
|
Operating income
margin excluding a loss contingency
reserve(1)
|
13.6%
|
14.0%
|
15.8%
|
14.3%
|
|
Income from continuing
operations attributable to DaVita HealthCare Partners
Inc
|
$ 208
|
$ 184
|
$ 212
|
$
723
|
|
Income from continuing
operations attributable to DaVita HealthCare Partners Inc.
excluding a loss contingency reserve and debt refinancing charges,
which are all net of related tax(1)
|
$ 208
|
$ 195
|
$ 212
|
$
792
|
|
Diluted income from
continuing operations per share attributable to DaVita HealthCare
Partners Inc
|
$ 0.96
|
$ 0.85
|
$ 0.99
|
$ 3.33
|
|
Diluted income from
continuing operations per share attributable to DaVita HealthCare
Partners Inc. excluding a loss contingency reserve and debt
refinancing charges, which are all net of related
tax(1)
|
$ 0.96
|
$ 0.90
|
$ 0.99
|
$ 3.64
|
|
|
|
|
|
|
2. Consolidated
Business Metrics:
|
|
|
|
|
|
Expenses
|
|
|
|
|
|
General and
administrative expenses as a percent of consolidated net
revenues(2)
|
10.7%
|
9.9%
|
10.4%
|
9.9%
|
|
Consolidated effective
tax rate
|
29.3%
|
34.7%
|
35.7%
|
34.1%
|
|
Consolidated effective
tax rate attributable to DaVita HealthCare Partners
Inc(1)
|
33.3%
|
38.7%
|
39.0%
|
38.1%
|
|
|
|
|
|
|
3. Summary of
Division Financial Results:
|
|
|
|
|
|
Net
revenues
|
|
|
|
|
|
Kidney
Care:
|
|
|
|
|
|
Net dialysis and
related lab services revenues
|
$ 2,151
|
$ 2,076
|
$ 2,007
|
$ 8,211
|
|
Net ancillary services
and strategic initiatives revenues, including international
dialysis operations
|
309
|
300
|
242
|
1,139
|
|
Elimination of
intersegment revenues
|
(14)
|
(16)
|
(15)
|
(57)
|
|
Total Kidney Care net
revenues
|
2,446
|
2,360
|
2,234
|
9,293
|
|
Net HCP
revenues
|
882
|
892
|
829
|
3,502
|
|
Total net consolidated
revenues
|
$ 3,328
|
$ 3,252
|
$ 3,063
|
$ 12,795
|
|
Operating
income
|
|
|
|
|
|
Kidney
Care:
|
|
|
|
|
|
Dialysis and related
lab services operating income
|
$
443
|
$
400
|
$ 408
|
$ 1,638
|
|
Other – Ancillary
services and strategic initiatives, including international
dialysis operations operating losses
|
(19)
|
(6)
|
(9)
|
(25)
|
|
Corporate support and
related long-term incentive compensation
|
(5)
|
(3)
|
(13)
|
(13)
|
|
Total Kidney Care
operating income
|
419
|
391
|
386
|
1,600
|
|
HCP operating
income
|
33
|
47
|
98
|
215
|
|
Total consolidated
operating income
|
$
452
|
$
438
|
$ 484
|
$ 1,815
|
|
DAVITA HEALTHCARE
PARTNERS INC.
|
|
SUPPLEMENTAL
FINANCIAL DATA—continued
|
|
(unaudited)
|
|
(dollars in
millions, except for per share and per treatment
data)
|
|
|
Three months
ended
|
Year
ended
December
31, 2014
|
|
December
31,
2014
|
September
30,
2014
|
December
31,
2013
|
|
4. Summary of
Reportable Segment Financial Results:
|
|
|
|
|
|
Dialysis and
Related Lab Services
|
|
|
|
|
|
Revenue:
|
|
|
|
|
|
Patient services
revenues
|
$ 2,243
|
$ 2,165
|
$ 2,076
|
$ 8,551
|
|
Provision for
uncollectible accounts
|
(95)
|
(92)
|
(72)
|
(353)
|
|
Net patient service
operating revenues
|
2,148
|
2,073
|
2,004
|
8,198
|
|
Other
revenues
|
3
|
3
|
3
|
13
|
|
Total net operating
revenues
|
$ 2,151
|
$ 2,076
|
$ 2,007
|
$ 8,211
|
|
Operating
expenses:
|
|
|
|
|
|
Patient care
costs
|
$ 1,415
|
$ 1,390
|
$ 1,325
|
$ 5,485
|
|
General and
administrative
|
192
|
170
|
184
|
682
|
|
Depreciation and
amortization
|
105
|
102
|
93
|
403
|
|
Equity investment
income
|
(4)
|
(3)
|
(3)
|
(14)
|
|
Loss contingency
reserve
|
─
|
17
|
─
|
17
|
|
Total operating
expenses
|
1,708
|
1,676
|
1,599
|
6,573
|
|
Segment operating
income
|
$
443
|
$
400
|
$
408
|
$ 1,638
|
|
HCP
|
|
|
|
|
|
Revenue:
|
|
|
|
|
|
HCP capitated
revenues
|
$
808
|
$
828
|
$ 752
|
$ 3,191
|
|
Patient services
revenues
|
56
|
57
|
63
|
232
|
|
Provision for
uncollectible accounts
|
(1)
|
(7)
|
(4)
|
(13)
|
|
Net patient service
operating revenues
|
55
|
50
|
59
|
219
|
|
Other
revenues
|
19
|
14
|
18
|
92
|
|
Total net operating
revenues
|
$ 882
|
$ 892
|
$ 829
|
$ 3,502
|
|
Operating
expenses:
|
|
|
|
|
|
Patient care
costs
|
$ 717
|
$ 719
|
$ 616
|
$ 2,796
|
|
General and
administrative
|
90
|
86
|
78
|
331
|
|
Depreciation and
amortization
|
43
|
42
|
43
|
170
|
|
Equity investment
income
|
(1)
|
(2)
|
(6)
|
(10)
|
|
Total operating
expenses
|
849
|
845
|
731
|
3,287
|
|
Segment operating
income
|
$
33
|
$
47
|
$
98
|
$ 215
|
|
|
|
|
|
|
5. Dialysis and
Related Lab Services Business Metrics:
|
|
|
|
|
|
Volume
|
|
|
|
|
|
Treatments
|
6,465,826
|
6,343,706
|
6,106,166
|
24,981,553
|
|
Number of treatment
days
|
79.4
|
79.0
|
79.6
|
312.8
|
|
Treatments per
day
|
81,434
|
80,300
|
76,711
|
79,864
|
|
Per day year over year
increase
|
6.2%
|
5.1%
|
6.3%
|
5.8%
|
|
Non-acquired growth
year over year
|
5.2%
|
4.4%
|
4.7%
|
5.1%
|
|
Normalized
non-acquired growth year over year
|
4.6%
|
4.9%
|
5.2%
|
5.0%
|
|
Operating
revenues before provision for uncollectible
accounts
|
|
|
|
|
|
Dialysis and related
lab services revenue per treatment
|
$ 346.95
|
$ 341.22
|
$ 340.04
|
$ 342.26
|
|
Per treatment increase
from previous quarter
|
1.7%
|
0.4%
|
─
|
─
|
|
Per treatment increase
from previous year
|
2.0%
|
0.4%
|
3.0%
|
0.7%
|
|
Percent of net
consolidated revenues
|
64.4%
|
63.5%
|
65.2%
|
63.9%
|
|
DAVITA HEALTHCARE
PARTNERS INC.
|
|
SUPPLEMENTAL
FINANCIAL DATA—continued
|
|
(unaudited)
|
|
(dollars in
millions, except for per share and per treatment
data)
|
|
|
Three months
ended
|
Year
ended
December
31, 2014
|
|
December
31,
2014
|
September
30,
2014
|
December
31,
2013
|
|
5. Dialysis and
Related Lab Services Business Metrics:
(continued)
|
|
|
|
|
|
Expenses
|
|
|
|
|
|
Patient care
costs
|
|
|
|
|
|
Percent of total
segment operating revenues
|
65.8%
|
66.9%
|
66.0%
|
66.8%
|
|
Per
treatment
|
$ 218.81
|
$ 219.07
|
$ 216.89
|
$ 219.56
|
|
Per treatment decrease
from previous quarter
|
(0.1%)
|
─
|
(0.1%)
|
─
|
|
Per treatment increase
from previous year
|
0.9%
|
0.9%
|
2.0%
|
1.4%
|
|
General and
administrative expenses
|
|
|
|
|
|
Percent of total
segment operating revenues
|
8.9%
|
8.2%
|
9.2%
|
8.3%
|
|
Per
treatment
|
$ 29.75
|
$ 26.86
|
$ 30.19
|
$ 27.31
|
|
Per treatment increase
(decrease) from previous quarter
|
10.8%
|
1.5%
|
(0.3%)
|
─
|
|
Per treatment
(decrease) increase from previous year
|
(1.5%)
|
(11.3%)
|
5.3%
|
(8.5%)
|
|
Accounts
receivable
|
|
|
|
|
|
Net
receivables
|
$ 1,157
|
$ 1,117
|
$ 1,173
|
$
─
|
|
DSO
|
50
|
50
|
55
|
─
|
|
Provision for
uncollectible accounts as a percentage of revenues
|
4.25%
|
4.25%
|
3.5%
|
4.1%
|
|
|
|
|
|
|
6. HCP Business
Metrics:
|
|
|
|
|
|
Capitated
membership
|
|
|
|
|
|
Total
|
837,000
|
828,000
|
764,000
|
─
|
|
Member
months
|
2,502,800
|
2,481,100
|
2,288,300
|
9,766,200
|
|
Capitated revenues
by sources
|
|
|
|
|
|
Commercial
revenues
|
$ 174
|
$ 188
|
$
183
|
$
726
|
|
Senior
revenues
|
573
|
605
|
550
|
2,319
|
|
Medicaid
revenues
|
61
|
35
|
19
|
146
|
|
Total capitated
revenues
|
$ 808
|
$ 828
|
$
752
|
$ 3,191
|
|
Other
|
|
|
|
|
|
Total care dollars
under management(1)
|
$ 1,165
|
$ 1,148
|
$ 1,045
|
$ 4,520
|
|
Ratio of operating
income to total care dollars under
management(1)
|
2.8%
|
4.0%
|
9.4%
|
4.8%
|
|
Full time
clinicians
|
1,156
|
1,153
|
1,120
|
─
|
|
IPA primary care
physicians
|
3,331
|
3,313
|
3,119
|
─
|
|
|
|
|
|
|
7. Cash
Flow:
|
|
|
|
|
|
Operating cash
flow
|
$ (70.0)
|
$ 847.9
|
$ 354.2
|
$ 1,459.4
|
|
Operating cash flow,
last twelve months
|
$ 1,459.4
|
$ 1,883.6
|
$ 1,773.3
|
$
─
|
|
Free cash
flow(1)
|
$ (197.0)
|
$ 740.3
|
$ 205.2
|
$ 1,045.1
|
|
Free cash flow, last
twelve months(1)
|
$ 1,045.1
|
$ 1,447.3
|
$ 1,365.5
|
$
─
|
|
Capital
expenditures:
|
|
|
|
|
|
Routine
maintenance/IT/other
|
$ 82.8
|
$ 68.3
|
$ 109.4
|
$ 265.0
|
|
Development and
relocations
|
$ 115.0
|
$ 96.6
|
$ 108.7
|
$ 376.3
|
|
Acquisition
expenditures
|
$ 54.0
|
$ 119.7
|
$ 75.6
|
$ 272.1
|
|
DAVITA HEALTHCARE
PARTNERS INC.
|
|
SUPPLEMENTAL
FINANCIAL DATA—continued
|
|
(unaudited)
|
|
(dollars in
millions, except for per share and per treatment
data)
|
|
|
Three months
ended
|
|
December
31,
2014
|
September
30,
2014
|
December
31,
2013
|
|
8. Debt and
Capital Structure:
|
|
|
|
|
Total
debt(3)
|
$ 8,520
|
$ 8,519
|
$ 8,434
|
|
Net debt, net of cash
and cash equivalents(3)
|
$ 7,555
|
$ 6,992
|
$ 7,488
|
|
Leverage ratio (see
calculation on page 13)
|
2.97x
|
2.79x
|
3.06x
|
|
Overall weighted
average effective interest rate during the quarter
|
4.46%
|
4.52%
|
4.87%
|
|
Overall weighted
average effective interest rate at end of the quarter
|
4.46%
|
4.46%
|
4.86%
|
|
Weighted average
effective interest rate on the Senior Secured Credit Facilities at
end of the quarter
|
3.43%
|
3.43%
|
4.18%
|
|
Fixed and economically
fixed interest rates as a percentage of our total debt
|
58%(4)
|
57%(4)
|
60%
|
|
Fixed and economically
fixed interest rates, including our interest rate cap agreements,
as a percentage of our total debt
|
90%(4)
|
90%(4)
|
93%
|
|
|
|
|
|
9. Clinical:
(quarterly averages)
|
|
|
|
|
Dialysis adequacy -%
of patients with Kt/V > 1.2 at the end of the quarter
|
98%
|
98%
|
98%
|
|
Dialysis patients with
arteriovenous fistulas placed
|
73%
|
73%
|
72%
|
________________
|
(1)
|
These are non-GAAP
financial measures. For a reconciliation of these non-GAAP
financial measures to their most comparable measure calculated and
presented in accordance with GAAP, see attached reconciliation
schedules.
|
|
|
|
(2)
|
Consolidated
percentages of revenues are comprised of the dialysis and related
lab services business, HCP's business and other ancillary services
and strategic initiatives. General and administrative expenses
includes certain corporate support and related long-term incentive
compensation.
|
|
|
|
(3)
|
The reported balance
sheet amounts at December 31, 2014 and September 30, 2014, excludes
$16.2 million and $16.9 million, respectively, of debt discount
associated with our New Term Loan B. In addition, the reported
balance sheet amounts at December 31, 2013 exclude $17.7 million of
debt discounts associated with our then existing Term Loan B and
Term Loan B-2.
|
|
|
|
(4)
|
The New Term Loan B
is subject to a LIBOR floor of 0.75%. Because actual LIBOR, for all
periods presented above, was lower than this embedded LIBOR floor,
the interest rate on the New Term Loan B is set at its respective
floor. At such time as the actual LIBOR-based variable component of
our interest rate exceeds 0.75% on the New Term Loan B, we will
then be subject to LIBOR-based interest rate volatility on the
LIBOR variable component of our interest rate on all of the New
Term Loan B. However, we are limited to a maximum rate of 2.50% on
$2.75 billion of outstanding principal debt on the New Term Loan B
as a result of interest rate cap agreements. The remaining $748
million outstanding principal balance of the New Term Loan B is
subject to LIBOR-based interest rate volatility above a floor of
0.75%.
|
|
DAVITA HEALTHCARE
PARTNERS INC.
|
|
SUPPLEMENTAL
FINANCIAL DATA—continued
|
|
(unaudited)
|
|
(dollars in
thousands)
|
|
|
Note 1:
Calculation of the Leverage Ratio
|
|
|
Under the Senior
Secured Credit Facilities (Credit Agreement), the leverage ratio is
defined as all funded debt plus the face amount of all letters of
credit issued, minus cash and cash equivalents, divided by
"Consolidated EBITDA". The leverage ratio determines the interest
rate margin payable by the Company for its Term Loan A and
revolving line of credit under the Credit Agreement by establishing
the margin over the base interest rate (LIBOR) that is applicable.
The following leverage ratio was calculated using "Consolidated
EBITDA" as defined in the Credit Agreement. The calculation below
is based on the last twelve months of "Consolidated EBITDA", pro
forma for routine acquisitions that occurred during the period. The
Company's management believes the presentation of "Consolidated
EBITDA" is useful to investors to enhance their understanding of
the Company's leverage ratio under its Credit Agreement.
|
|
Year
ended
December 31,
2014
|
|
Net income
attributable to DaVita HealthCare Partners Inc
|
$
723,114
|
|
Income
taxes
|
446,343
|
|
Interest
expense
|
382,568
|
|
Depreciation and
amortization
|
590,935
|
|
Loss contingency
reserve
|
17,000
|
|
Noncontrolling
interests and equity investment income, net
|
162,294
|
|
Stock-based
compensation
|
56,744
|
|
Debt refinancing
charges
|
97,548
|
|
Other
|
25,576
|
|
"Consolidated
EBITDA"
|
$
2,502,122
|
|
|
|
December 31,
2014
|
|
Total debt, excluding
debt discount of $16.2 million
|
$
8,519,642
|
|
Letters of credit
issued
|
96,424
|
|
8,616,066
|
|
Less: Cash and cash
equivalents (less HCP's physician owned entities cash)
|
(1,190,241)
|
|
Consolidated net
debt
|
$
7,425,825
|
|
Last twelve months
"Consolidated EBITDA"
|
$
2,502,122
|
|
Leverage
ratio
|
2.97x
|
|
In accordance with
the Credit Agreement, the Company's leverage ratio cannot exceed
5.00 to 1.00 as of December 31, 2014. At that date the Company's
leverage ratio did not exceed 5.00 to 1.00.
|
|
DAVITA HEALTHCARE
PARTNERS INC.
|
|
RECONCILIATIONS
FOR NON-GAAP MEASURES
|
|
(unaudited)
|
|
(dollars in
thousands except for per share data)
|
|
|
1.
Income from continuing operations and diluted income from
continuing operations per share attributable to DaVita HealthCare
Partners Inc. excluding a loss contingency reserve, debt
refinancing charges and a contingent earn-out obligation
adjustment, net of related tax.
|
|
|
We believe that
income from continuing operations attributable to DaVita HealthCare
Partners Inc. excluding a loss contingency reserve, debt
refinancing charges and a contingent earn-out obligation
adjustment, net of related tax, enhances a user's understanding of
our normal income from continuing operations attributable to DaVita
HealthCare Partners Inc. and diluted income from continuing
operations per share attributable to DaVita HealthCare Partners
Inc. for these periods by providing a measure that is meaningful
because it excludes unusual amounts related to a loss contingency
reserve related to the 2010 and 2011 U.S. Attorney Physician
Relationship Investigations, the debt refinancing charges that
resulted from the refinancing of our Senior Secured Credit
Facilities, the redemption of the $775 million 6 ⅜% Senior Notes,
as well as the termination of certain interest rate swap agreements
and an adjustment to HCP's contingent earn-out obligation, and
accordingly, is comparable to prior periods and indicative of
consistent income from continuing operations attributable to DaVita
HealthCare Partners Inc. and diluted income from continuing
operations per share attributable to DaVita HealthCare Partners
Inc. These measures are not measures of financial performance under
United States generally accepted accounting principles (GAAP) and
should not be considered as an alternative to income from
continuing operations attributable to DaVita HealthCare Partners
Inc. and diluted income from continuing operations per share
attributable to DaVita HealthCare Partners Inc.
|
|
Income from
continuing operations attributable to DaVita HealthCare Partners
Inc. excluding a loss contingency reserve, debt refinancing charges
and a contingent earn-out obligation adjustment, net of related
tax:
|
Three months
ended
|
Year
ended
|
|
December
31,
2014
|
September
30,
2014
|
December
31,
2013
|
December
31,
2014
|
December
31,
2013
|
|
Income from
continuing operations attributable to DaVita HealthCare Partners
Inc
|
$ 208,020
|
$ 184,122
|
$ 212,278
|
$ 723,114
|
$ 620,197
|
|
Add
(Less):
|
|
|
|
|
|
|
Loss contingency
reserve
|
─
|
17,000
|
─
|
17,000
|
397,000
|
|
Debt refinancing
charges
|
─
|
─
|
─
|
97,548
|
─
|
|
Contingent earn-out
obligation adjustment
|
─
|
─
|
─
|
─
|
(56,977)
|
|
Less: Related
income tax
|
─
|
(6,588)
|
─
|
(46,095)
|
(142,650)
|
|
$ 208,020
|
$ 194,534
|
$ 212,278
|
$ 791,567
|
$ 817,570
|
|
Diluted income
from continuing operations per share attributable to DaVita
HealthCare Partners Inc. excluding a loss contingency reserve, debt
refinancing charges and a contingent earn-out obligation
adjustment, net of related tax:
|
Three months
ended
|
Year
ended
|
|
December
31,
2014
|
September
30,
2014
|
December
31,
2013
|
December
31,
2014
|
December
31,
2013
|
|
Diluted income from
continuing operations per share attributable to DaVita HealthCare
Partners Inc
|
$
0.96
|
$
0.85
|
$ 0.99
|
$ 3.33
|
$ 2.89
|
|
Add
(Less):
|
|
|
|
|
|
|
Loss contingency
reserve
|
─
|
0.05
|
─
|
0.05
|
1.18
|
|
Debt refinancing
charges
|
─
|
─
|
─
|
0.26
|
─
|
|
Contingent earn-out
obligation adjustment
|
─
|
─
|
─
|
─
|
(0.26)
|
|
$ 0.96
|
$ 0.90
|
$ 0.99
|
$ 3.64
|
$ 3.81
|
|
DAVITA HEALTHCARE
PARTNERS INC.
|
|
RECONCILIATIONS
FOR NON-GAAP MEASURES – (continued)
|
|
(unaudited)
|
|
(dollars in
thousands except for per share data)
|
|
|
In addition, we have
excluded amortization of intangible assets associated with
acquisitions from our adjusted income from continuing operations
attributable to DaVita HealthCare Partners Inc. and from our
adjusted diluted income from continuing operations per share
attributable to DaVita HealthCare Partners Inc. as we believe this
presentation enhances a user's understanding of our operating
results for these periods by providing a different reflection of
the Company's operating performance since it excludes the
amortization of intangible assets that relate to the remeasurement
of acquired intangible assets associated with our acquisitions to
fair value, and accordingly is indicative of consistent income from
continuing operations attributable to DaVita HealthCare Partners
Inc. and diluted income from continuing operations per share
attributable to DaVita HealthCare Partners Inc. These measures are
not measures of financial performance under GAAP and should not be
considered as an alternative to income from continuing operations
attributable to DaVita HealthCare Partners Inc. and diluted income
from continuing operations per share attributable to DaVita
HealthCare Partners Inc.
|
|
Adjusted income
from continuing operations and adjusted diluted income from
continuing operations per share attributable to DaVita HealthCare
Partners Inc., further adjusted to exclude the amortization of
intangible assets associated with acquisitions:
|
Three months
ended
|
Year
ended
|
|
December
31,
2014
|
September
30,
2014
|
December
31,
2013
|
December
31,
2014
|
December
31,
2013
|
|
Adjusted income from
continuing operations attributable to DaVita HealthCare Partners
Inc
|
$ 208,020
|
$ 194,534
|
$ 212,278
|
$ 791,567
|
$ 817,570
|
|
Add:
|
|
|
|
|
|
|
Amortization of intangible assets associated with acquisitions for
the dialysis and ancillary operations
|
6,468
|
6,673
|
6,802
|
26,721
|
27,280
|
|
Amortization of intangible assets associated with acquisitions for
the HCP operations
|
35,792
|
35,276
|
33,919
|
141,218
|
133,599
|
|
Less: Related income
tax
|
(14,073)
|
(16,256)
|
(15,881)
|
(63,985)
|
(63,387)
|
|
$ 236,207
|
$ 220,227
|
$ 237,118
|
$ 895,521
|
$ 915,062
|
|
|
|
|
|
|
|
Adjusted diluted
income from continuing operations per share attributable to DaVita
HealthCare Partners Inc
|
$ 0.96
|
$ 0.90
|
$ 0.99
|
$ 3.64
|
$ 3.81
|
|
Add:
|
|
|
|
|
|
|
Amortization of
intangible assets per share associated with acquisitions for the
dialysis and ancillary operations, net of tax
|
0.02
|
0.02
|
0.02
|
0.08
|
0.08
|
|
Amortization of
intangible assets per share associated with acquisitions for the
HCP operations, net of tax
|
0.11
|
0.09
|
0.09
|
0.41
|
0.37
|
|
$ 1.09
|
$ 1.01
|
$ 1.10
|
$ 4.13
|
$ 4.26
|
|
DAVITA HEALTHCARE
PARTNERS INC.
|
|
RECONCILIATIONS
FOR NON-GAAP MEASURES
|
|
(unaudited)
|
|
(dollars in
thousands)
|
|
|
2.
Operating income excluding a pre-tax loss contingency reserve, an
adjustment to reduce a tax asset associated with the HCP
acquisition escrow provisions, and a pre-tax contingent earn-out
obligation adjustment.
|
|
|
We believe that
operating income excluding a pre-tax loss contingency reserve, an
adjustment to reduce a tax asset associated with the HCP
acquisition escrow provisions and a pre-tax contingent earn-out
obligation adjustment enhances a user's understanding of our normal
operating income for these periods by providing a measure that is
meaningful because it excludes unusual amounts that includes a loss
contingency reserve related to the 2010 and 2011 U.S. Attorney
Physician Relationship Investigations, an adjustment to reduce a
tax asset associated with the HCP acquisition escrow provisions
that was established as a receivable to offset any potential tax
liabilities and an adjustment for HCP's contingent earn-out
obligation, and accordingly, is comparable to prior periods and
indicative of consistent operating income. This measure is not a
measure of financial performance under GAAP and should not be
considered as an alternative to operating income.
|
|
Operating income
excluding a pre-tax loss contingency reserve, an adjustment to
reduce a tax asset associated with the HCP acquisition escrow
provisions and a pre-tax contingent earn-out obligation
adjustment:
|
Three months
ended
|
Year
ended
|
|
December
31,
2014
|
September
30,
2014
|
December
31,
2013
|
December
31,
2014
|
December
31,
2013
|
|
Operating
income
|
$ 452,085
|
$ 437,536
|
$ 484,179
|
$ 1,815,141
|
$ 1,550,134
|
|
Add
(Less):
|
|
|
|
|
|
|
Loss contingency
reserve
|
─
|
17,000
|
─
|
17,000
|
397,000
|
|
Adjustment to reduce a
tax asset associated with the HCP acquisition escrow
provisions
|
─
|
─
|
─
|
─
|
7,721
|
|
Contingent earn-out
obligation adjustment
|
─
|
─
|
─
|
─
|
(56,977)
|
|
Adjusted operating
income
|
$ 452,085
|
$ 454,536
|
$ 484,179
|
$ 1,832,141
|
$ 1,897,878
|
|
DAVITA HEALTHCARE
PARTNERS INC.
|
|
RECONCILIATIONS
FOR NON-GAAP MEASURES
|
|
(unaudited)
|
|
(dollars in
thousands)
|
|
|
3.
Effective Income Tax Rates
|
|
|
We believe that
reporting the effective income tax rate attributable to DaVita
HealthCare Partners Inc. excluding noncontrolling owners' income
that primarily relates to non-tax paying entities is meaningful to
an investor to fully understand the related income tax effects on
DaVita HealthCare Partners Inc.'s operating results. This is not a
measure under GAAP and should not be considered as an alternative
to the effective income tax rate calculated in accordance with
GAAP.
|
|
|
Effective income tax
rate as compared to the effective income tax rate attributable to
DaVita HealthCare Partners Inc. is as follows:
|
|
Three months
ended
|
Year
ended
December
31, 2014
|
|
December
31,
2014
|
September
30,
2014
|
December
31,
2013
|
|
Income from
continuing operations before income taxes
|
$ 354,365
|
$ 336,412
|
$ 380,020
|
$ 1,309,673
|
|
Income tax
expense
|
$ 103,977
|
$ 116,628
|
$ 135,747
|
$ 446,343
|
|
Effective income tax
rate
|
29.3%
|
34.7%
|
35.7%
|
34.1%
|
|
|
|
|
Three months
ended
|
Year
ended
December
31, 2014
|
|
December
31,
2014
|
September
30,
2014
|
December
31,
2013
|
|
Income from
continuing operations before income taxes
|
$ 354,365
|
$ 336,412
|
$ 380,020
|
$ 1,309,673
|
|
Less:
Noncontrolling owners' income primarily attributable to non-tax
paying entities
|
(42,495)
|
(35,810)
|
(32,020)
|
(140,949)
|
|
Income before income
taxes attributable to DaVita HealthCare Partners Inc
|
$ 311,870
|
$ 300,602
|
$ 348,000
|
$ 1,168,724
|
|
|
|
|
|
|
Income tax
expense
|
103,977
|
116,628
|
$ 135,747
|
$ 446,343
|
|
Less: Income tax
attributable to noncontrolling interests
|
(127)
|
(148)
|
(25)
|
(733)
|
|
Income tax
attributable to DaVita HealthCare Partners Inc
|
$ 103,850
|
$ 116,480
|
$ 135,722
|
$ 445,610
|
|
|
|
|
|
|
Effective income tax
rate attributable to DaVita HealthCare Partners Inc
|
33.3%
|
38.7%
|
39.0%
|
38.1%
|
|
|
DAVITA HEALTHCARE
PARTNERS INC.
|
|
RECONCILIATIONS
FOR NON-GAAP MEASURES
|
|
(unaudited)
|
|
(dollars in
thousands)
|
|
|
4. Free cash
flow and adjusted operating cash flow
|
|
|
Free cash flow
represents net cash provided by operating activities less
distributions to noncontrolling interests and capital expenditures
for routine maintenance and information technology. We believe free
cash flow is a useful adjunct to cash flow from operating
activities and other measurements under GAAP, since free cash flow
is a meaningful measure of our ability to fund acquisition and
development activities and meet our debt service requirements. In
addition, free cash flow excluding distributions to noncontrolling
interests provides an investor with an understanding of free cash
flows that are attributable to DaVita HealthCare Partners Inc. We
have also presented adjusted operating cash flow excluding the
payment made in the fourth quarter of 2014 related to the
settlement of the 2010 and 2011 U.S. Attorney Physician
Relationship Investigations. We believe this measure is meaningful
to investors to understand our operating cash flows that were
generated excluding this one-time unusual payment that was part of
the Settlement Agreement. Free cash and adjusted operating cash
flow are not measures of financial performance under GAAP and
should not be considered as an alternative to cash flows from
operating, investing or financing activities, as an indicator of
cash flows or as a measure of liquidity.
|
|
Three months
ended
|
Year
ended
December 31,
2014
|
|
December
31,
2014
|
September
30,
2014
|
December
31,
2013
|
|
Cash (used in)
provided by operating activities
|
$ (69,991)
|
$ 847,900
|
$ 354,187
|
$ 1,459,407
|
|
Less:
Distributions to noncontrolling interests
|
(44,196)
|
(39,325)
|
(39,590)
|
(149,339)
|
|
Cash (used in)
provided by operating activities attributable to DaVita HealthCare
Partners Inc
|
(114,187)
|
808,575
|
314,597
|
1,310,068
|
|
Less: Expenditures
for routine maintenance and information technology
|
(82,811)
|
(68,263)
|
(109,402)
|
(264,972)
|
|
Free cash
flow
|
$ (196,998)
|
$ 740,312
|
$ 205,195
|
$ 1,045,096
|
|
|
|
|
|
Rolling 12-Month
Period
|
|
|
December
31,
2014
|
September
30,
2014
|
December
31,
2013
|
|
Cash provided by
operating activities
|
|
$ 1,459,407
|
$ 1,883,585
|
$ 1,773,341
|
|
Less:
Distributions to noncontrolling interests
|
|
(149,339)
|
(144,733)
|
(139,326)
|
|
Cash provided by
operating activities attributable to DaVita HealthCare Partners
Inc
|
|
1,310,068
|
1,738,852
|
1,634,015
|
|
Less: Expenditures
for routine maintenance and information technology
|
|
(264,972)
|
(291,563)
|
(268,499)
|
|
Free cash
flow
|
|
$ 1,045,096
|
$ 1,447,289
|
$ 1,365,516
|
|
|
|
|
|
|
|
Three months ended
December 31, 2014
|
Year ended
December 31, 2014
|
|
|
Cash (used in)
provided by operating activities
|
|
$ (69,991)
|
$ 1,459,407
|
|
|
Payment in connection
with the settlement of the 2010 and 2011 U.S. Attorney Physician
Relationship Investigations
|
|
410,356
|
410,356
|
|
|
Related tax
benefit
|
|
(141,487)
|
(141,487)
|
|
|
Adjusted operating
cash flow
|
|
$ 198,878
|
$ 1,728,276
|
|
|
DAVITA HEALTHCARE
PARTNERS INC.
|
|
RECONCILIATIONS
FOR NON-GAAP MEASURES
|
|
(unaudited)
|
|
(dollars in
thousands)
|
|
|
5. Total
care dollars under management
|
|
|
In California, as a
result of our managed care administrative services agreements with
hospitals, HCP does not assume the direct financial risk for
institutional (hospital) services in most cases, but is responsible
for managing the care dollars associated with both the professional
(physician) and institutional services being provided for the Per
Member Per Month (PMPM) fee attributable to both professional and
institutional services. In cases where HCP does not assume the
direct financial risk, HCP recognizes the surplus of institutional
revenue less institutional expense as HCP net revenue. In addition
to revenues recognized for financial reporting purposes, HCP
measures its total care dollars under management, which includes
the PMPM fee payable to third parties for institutional (hospital)
services where HCP manages the care provided to its members by the
hospitals and other institutions, which are not included in GAAP
revenues. HCP uses total care dollars under management as a
supplement to GAAP revenues as it allows HCP to measure profit
margins on a comparable basis across both the global capitation
model (where HCP assumes the full financial risk for all services,
including institutional services) and the risk sharing models
(where HCP operates under managed care administrative services
agreements where HCP does not assume the full risk). HCP believes
that presenting amounts in this manner is useful because it
presents its operations on a unified basis without the complication
caused by models that HCP has adopted in its California market as a
result of various regulations related to the assumption of
institutional risk. Total care dollars under management is not a
measure of financial performance computed in accordance with GAAP
and should not be considered in isolation or as a substitute for
revenues calculated in accordance with GAAP. Total care dollars
under management includes PMPM payments received from third parties
that are recorded net of expenses in our accounting records. The
following table reconciles total care dollars under management to
medical revenues to the periods indicated.
|
|
Three months
ended
|
Year
ended
December
31, 2014
|
|
December
31,
2014
|
September
30,
2014
|
December
31,
2013
|
|
Medical
revenues
|
$ 863,555
|
$ 879,130
|
$ 810,553
|
$ 3,410,395
|
|
Less: Risk share
revenue, net
|
(12,805)
|
(32,568)
|
(41,288)
|
(83,856)
|
|
Add: Institutional
capitation amounts
|
314,100
|
301,079
|
275,380
|
1,193,811
|
|
Total care dollars
under management
|
$ 1,164,850
|
$ 1,147,641
|
$ 1,044,645
|
$ 4,520,350
|
|
Contact:
|
Jim
Gustafson
|
|
Investor
Relations
|
|
DaVita HealthCare
Partners Inc.
|
|
(310)
536-2585
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/davita-healthcare-partners-inc-4th-quarter-2014-results-300035544.html
SOURCE DaVita HealthCare Partners Inc.